Data Spotlight: Ranking States by Their Dependence on Manufacturing

What’s clear, however, is certain states (think Indiana, Wisconsin, and Arkansas) depend on manufacturing to fuel their economies more than others. One way to measure just how dependent states are on manufacturing – rather than simply looking at total jobs or exports – is by looking at a common concentration measure known as location quotient (LQ).

Here is an overview of the 10 states most dependent on manufacturing, with the top five subsectors for each based on their concentration compared to the nation. (We also have data on all 50 states and Washington, D.C. below.) A location quotient of 1.00 is the national average, and an LQ of 1.20 and above indicates the industry is specialized in the state.

Industries with a high LQ are typically (but not always) export-oriented industries, which are important because they bring money into the region, rather than simply circulating money that is already in the region (as most retail stores and restaurants do). Industries that have both high LQ and relatively high total job numbers typically form a region’s economic base. Economic developers and government officials need to pay particular attention to these industries not only for the jobs they provide, but also for their multiplier effect – the jobs they create in other dependent industries like retail trade and food services.

As you scan through this list, also pay attention to industries with rapidly declining or growing LQs. For example, Michigan’s concentration in auto manufacturing declined 15% from 2001 to 2011 (not a good sign because it’s the second-largest manufacturing industry in the state and employment has plummeted). On the flip side, Alabama’s concentration in auto manufacturing grew more than 466% in the last decade, indicating that the state is now taking up a much larger share of national employment (third most among states, up from 14th in ’01). Keep in mind that growing employment paired with declining LQ indicates that the industry is not growing as fast in the state as it is in the national economy.

Note: All 2011 jobs and LQ figures are estimates because of lags in federal and state data sources. The numbers cited come from EMSI’s 2011.4 Covered Employment dataset.

1. Indiana (LQ: 1.86; 2001-11 Job Change: -26%)

Indiana is 86% more concentrated in manufacturing than average and just nudges Wisconsin for the top spot in our analysis. Auto manufacturing, with an LQ of 10.79 (or almost 11 times more concentrated in the state that nationally), is a big reason why. Iron and steel mills (9.94) and engine, turbine and power transmission equipment manufacturing (5.27) also factor prominently on our list.

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3362

Motor Vehicle Body and Trailer Manufacturing

25,555

$48,295

8.22

10.79

31.3%

3311

Iron and Steel Mills and Ferroalloy Manufacturing

18,766

$85,497

9.79

9.94

1.5%

3336

Engine, Turbine, and Power Transmission Equipment Manufacturing

10,539

$85,387

5.49

5.27

-4.0%

3363

Motor Vehicle Parts Manufacturing

47,592

$55,973

5.09

5.25

3.1%

3325

Hardware Manufacturing

2,304

$61,647

3.84

4.50

17.2%

2. Wisconsin (LQ: 1.85; 2001-11 Job Change: -21%)

Wisconsin is significantly more concentrated in manufacturing than the next state on the list, Iowa. Leading the way are other transportation equipment manufacturing (7.15) and dairy product manufacturing (6.24), the latter of which is certainly not a surprise to see high on this list. Notice the big increase in foundries (5.83, up 26.5%) compared to the nation, and the substantial decline in pulp and paper mills (5.82, an 17.6% decline).

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3369

Other Transportation Equipment Manufacturing

4,905

$86,543

7.78

7.15

-8.1%

3115

Dairy Product Manufacturing

16,749

$45,295

6.02

6.24

3.7%

3315

Foundries

14,157

$51,783

4.61

5.83

26.5%

3221

Pulp, Paper, and Paperboard Mills

13,353

$64,630

7.06

5.82

-17.6%

3353

Electrical Equipment Manufacturing

13,729

$71,270

4.62

4.86

5.2%

3. Iowa (LQ: 1.55; 2001-11 Job Change: -15%)

Like the two states above it, Iowa has seen a marked increased in manufacturing concentration over the last decade (see the state-by-state table below). Only a few states, in fact, have grown more in concentration percentage since 2001 than Iowa. The most concentrated manufacturing subsectors are related to agriculture (grain and oilseed milling) and animal food or slaughtering. Household appliance manufacturing, meanwhile, has dropped precipitously in concentration, at least partly because of the loss of Maytag in Newton.

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3112

Grain and Oilseed Milling

6,664

$68,252

9.58

10.09

5.3%

3331

Agriculture, Construction, and Mining Machinery Manufacturing

20,157

$66,849

7.80

8.34

6.9%

3111

Animal Food Manufacturing

3,219

$58,734

5.20

5.52

6.2%

3116

Animal Slaughtering and Processing

28,599

$37,843

4.95

5.23

5.7%

3352

Household Appliance Manufacturing

3,388

$36,761

7.07

5.05

-28.6%

4. Arkansas (LQ: 1.51; 2001-11 Job Change: -30%)

Arkansas has lost nearly a third of its manufacturing employment base in the last decade, and it’s the top state in the top four of our list to see its concentration retreat during that time. Nearly one in out of every five manufacturing job in Arkansas is classified under animal slaughtering and processing (7.01 LQ), an industry that was more concentrated in the state 10 years ago.

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3162

Footwear Manufacturing

1,182

$25,910

8.37

9.65

15.3%

3116

Animal Slaughtering and Processing

30,480

$27,262

7.88

7.01

-11.0%

3211

Sawmills and Wood Preservation

3,941

$35,606

5.93

5.34

-9.9%

3112

Grain and Oilseed Milling

2,333

$41,828

4.40

4.44

0.9%

3212

Veneer, Plywood, and Engineered Wood Product Manufacturing

2,398

$44,969

3.23

4.32

33.7%

5. Michigan (LQ: 1.46; 2001-11 Job Change: -39%)

No state in the country has lost the largest a bigger percentage of manufacturing jobs than Michigan since 2001. That’s no surprise. Nor is the fact that the most-concentrated industries in the state (and the ones that have seen the biggest drops in concentration) are related to car manufacturing.

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3361

Motor Vehicle Manufacturing

37,171

$96,951

9.51

8.06

-15.2%

3363

Motor Vehicle Parts Manufacturing

90,140

$70,296

7.77

7.10

-8.6%

3335

Metalworking Machinery Manufacturing

31,170

$61,097

5.80

6.52

12.4%

3372

Office Furniture (including Fixtures) Manufacturing

14,435

$54,897

4.73

5.14

8.7%

3328

Coating, Engraving, Heat Treating, and Allied Activities

12,445

$44,369

3.20

3.30

3.1%

6. Alabama (LQ: 1.45; 2001-11 Job Change: -27%)

Alabama is in the top 10 of our list largely because apparel/textile manufacturing, a subsector that’s taken a mammoth hit over the past decade but is still heavily concentrated in Alabama and other Southern states. Also notice motor vehicle manufacturing, which had a relatively small presence in 2001 (3,400 jobs) but has since become a big player in the state (10,400 jobs in 2011, 466% increase in LQ).

NAICS Code

Name

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3151

Apparel Knitting Mills

2,630

$27,506

13.15

10.32

-21.5%

3131

Fiber, Yarn, and Thread Mills

3,420

$34,075

6.74

8.15

20.9%

3346

Manufacturing and Reproducing Magnetic and Optical Media

2,296

$40,704

3.88

6.51

67.8%

3221

Pulp, Paper, and Paperboard Mills

8,754

$85,485

4.81

5.56

15.6%

3361

Motor Vehicle Manufacturing

10,404

$73,961

0.83

4.70

466.3%

7. Ohio (LQ: 1.41; 2001-11 Job Change: -34%)

Ohio has the third most manufacturing jobs of any state and has actually expanded slightly since 2010. The rest of the previous decade, however, was filled with heavy job loss. Household appliance manufacturing (4.12) is the most concentrated subsector in the state; it grew 3.1% from 2009 to 2011.

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3352

Household Appliance Manufacturing

9,435

$41,793

3.45

4.12

19.4%

3312

Steel Product Manufacturing from Purchased Steel

7,852

$56,654

4.31

3.69

-14.4%

3363

Motor Vehicle Parts Manufacturing

56,185

$58,032

3.27

3.39

3.7%

3335

Metalworking Machinery Manufacturing

19,972

$52,477

3.04

3.19

4.9%

3361

Motor Vehicle Manufacturing

19,153

$74,595

3.16

3.18

0.6%

8 (tie). Kansas (LQ: 1.35; 2001-11 Job Change: -17%)

In terms of overall jobs and concentration, no manufacturing industry means more to Kansas than aerospace product and parts manufacturing. But the industry’s presence has already started to wane (27% decrease in LQ since 2001), and the decline will escalate with Boeing’s departure from Wichita by 2013.

NAICS Code

Name

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3364

Aerospace Product and Parts Manufacturing

32,443

$73,447

9.09

6.58

-27.6%

3111

Animal Food Manufacturing

3,065

$51,185

4.18

5.79

38.5%

3159

Apparel Accessories and Other Apparel Manufacturing

597

$45,359

0.22

4.39

1895.5%

3116

Animal Slaughtering and Processing

17,830

$38,746

3.54

3.59

1.4%

3342

Communications Equipment Manufacturing

3,768

$63,272

1.03

3.16

206.8%

8 (tie). Mississippi (LQ: 1.35; 2001-11 Job Change: -33%)

With a huge ship and boat building presence (13.60 LQ), Mississippi slips into the top 10 of our list. But its overall manufacturing concentration is declining (see large state table below) and the state lost 33% of its manufacturing jobs from 2001 to 2011.

Aluminum production/processing and motor vehicle manufacturing are the top two concentrated manufacturing industries in Kentucky. In terms of jobs, auto parts manufacturing is easily the largest (24,000-plus jobs).

NAICS Code

Industry

2011 Jobs

2011 Average Earnings

2001 LQ

2011 LQ

LQ % Change

3313

Alumina and Aluminum Production and Processing

4,739

$62,568

3.91

6.07

55.2%

3361

Motor Vehicle Manufacturing

11,997

$77,590

5.32

5.54

4.1%

3122

Tobacco Manufacturing

1,115

$46,030

3.84

5.07

32.0%

3352

Household Appliance Manufacturing

4,105

$70,294

3.47

5.00

44.1%

3363

Motor Vehicle Parts Manufacturing

24,292

$44,799

3.07

4.08

32.9%

Other Notable States

We should mention that several other states rely on manufacturing to drive their economy – even if they don’t show up in our top 10. For example, Pennsylvania has a sizable advanced manufacturing presence, and Nebraska is also focusing on light and advanced manufacturing, particularly in producing plastic products.

Manufacturing numbers for each state and Washington, D.C. are included below. Three Southern states – South Carolina, Tennessee, and North Carolina – didn’t make the above list but sit between 11 and 15 on our list.

Notice that Alaska is the only state in which manufacturing grew in the last decade. Despite the 7% increase, Alaska still is in the bottom 10 in terms of concentration.

Ranking (by 2011 LQ)

State

2011 Manufacturing Jobs

2001-11 % Job Change

2001 Job Concentration (LQ)

2011 Job Concentration (LQ)

2001-11 LQ % Change

Source: EMSI Covered Employment (2011.4)

1

Indiana

454,542

-26%

1.70

1.86

9.4%

2

Wisconsin

444,824

-21%

1.64

1.85

12.8%

3

Iowa

204,560

-15%

1.33

1.55

16.5%

4

Arkansas

157,813

-30%

1.58

1.51

-4.4%

5

Michigan

499,462

-39%

1.47

1.46

-0.7%

6

Alabama

238,711

-27%

1.38

1.45

5.1%

7

Ohio

631,252

-34%

1.40

1.41

0.7%

8

Kansas

161,122

-17%

1.14

1.35

18.4%

9

Mississippi

133,634

-33%

1.40

1.35

-3.6%

10

Kentucky

213,869

-27%

1.31

1.33

1.5%

11

South Carolina

214,569

-32%

1.37

1.32

-3.6%

12

Tennessee

299,974

-34%

1.37

1.30

-5.1%

13

Minnesota

297,278

-21%

1.15

1.28

11.3%

14

North Carolina

435,580

-38%

1.45

1.24

-14.5%

15

New Hampshire

66,707

-32%

1.27

1.23

-3.1%

16

Vermont

31,798

-30%

1.21

1.19

-1.7%

17

Connecticut

166,861

-26%

1.08

1.16

7.4%

18

Oregon

167,264

-22%

1.08

1.15

6.5%

19

Pennsylvania

571,520

-31%

1.18

1.15

-2.5%

20

Illinois

570,811

-30%

1.10

1.14

3.6%

21

Nebraska

94,233

-15%

0.98

1.13

15.3%

22

Utah

114,459

-6%

0.91

1.08

18.7%

23

Missouri

250,231

-27%

1.02

1.07

4.9%

24

South Dakota

38,239

-7%

0.87

1.06

21.8%

25

Georgia

348,258

-30%

1.02

1.02

0.0%

26

Washington

260,471

-16%

0.91

1.00

9.9%

27

Rhode Island

41,040

-39%

1.13

1.00

-11.5%

28

Idaho

54,184

-21%

0.94

0.98

4.3%

29

Maine

51,449

-31%

0.99

0.98

-1.0%

30

California

1,253,988

-30%

0.94

0.96

2.1%

31

Oklahoma

131,477

-23%

0.91

0.95

4.4%

32

Massachusetts

256,398

-34%

0.95

0.90

-5.3%

33

Texas

825,002

-20%

0.87

0.88

1.1%

34

Louisiana

141,356

-18%

0.72

0.84

16.7%

35

West Virginia

49,544

-31%

0.83

0.78

-6.0%

36

New Jersey

251,872

-37%

0.82

0.75

-8.5%

37

Delaware

26,267

-33%

0.75

0.72

-4.0%

38

Arizona

150,102

-26%

0.71

0.70

-1.4%

39

Virginia

231,793

-32%

0.76

0.70

-7.9%

40

North Dakota

23,378

-3%

0.58

0.67

15.5%

41

Colorado

126,837

-30%

0.65

0.63

-3.1%

42

New York

453,679

-35%

0.67

0.60

-10.4%

43

Maryland

113,766

-33%

0.54

0.51

-5.6%

44

Florida

307,020

-29%

0.48

0.48

0.0%

45

Alaska

13,303

7%

0.33

0.43

30.3%

46

Montana

16,114

-25%

0.43

0.42

-2.3%

47

New Mexico

28,826

-30%

0.43

0.40

-7.0%

48

Nevada

36,156

-17%

0.33

0.36

9.1%

49

Wyoming

8,846

-12%

0.33

0.35

6.1%

50

Hawaii

13,134

-20%

0.22

0.23

4.5%

51

District of Columbia

1,209

-65%

0.04

0.02

-50.0%

Joshua Wright is an editor at EMSI, an Idaho-based economics firm that provides data and analysis to workforce boards, economic development agencies, higher education institutions, and the private sector. He manages the EMSI blog and is a freelance journalist. Contact him here.